The Back Door to 100% Mortgages

The Canadian mortgage market has been free of the drama characterizing the US stage due its more conservative lending practices. To save Canadians from the traps of no money down mortgages, the government banned both 100 percentage mortgages and 40 year terms "to reduce the risk of as US-style housing bubble in Canada."

Mortgage brokers, however, claim that the rules can easily be sidestepped. According to Innis mortgage broker Paula Siemens, borrowers have several ways around the new rules.

•· They can use a non-Canadian bank. US Bank Wells Fargo makes 100% loans available to Canadians.

•· They can borrow the down payment to comply with Canadian banking rules that allow loans up to 95% of the mortgage balance. The loans might come from friends or family or lines of credit or cash advances from credit cards.

•· They can use a cash-back mortgage offered by some banks. That gives the borrowers 5-7% back upon closing. Those banks try to prevent borrowers from using the cash for down payments, but if a mortgage applicant raised the money from family and friends for the down payments and then later repaid his sources with his cash-back funds, the loan would still be in place. The cash-back mortgage usually comes with a higher interest rate.

Banks resist no money down deals because the borrowers have less at stake if they fall on hard times. Just because there are ways around the no money down ban does it mean this option makes good sense for most people, aside from possiby young professionals with high credit scores and large earning potential.

Stable, equity-backed loans are part of what has kept Canadian banks sound in comparison to their southern neighbors in need of bailouts.

For information about great places to live in Windsor, call your Prudential Select Real Estate Agent Mark Tesolin at (519) 972-5505 or visit http://marktesolin.com

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